In my opinion, the city/state should run down the middle with lines on either side. and then the partial city and partial state at the ends.
Of course, that's only one idea. You could collect all varieties found if you had a mind to, but it seems to me that would be a bit overwhelming. Then, of course, you have varieties with the text reading up and others with the text reading down. The options are virtually endless.
Here's my Louisville, KY Type 163 Precancel. In a perfect world it would have the lines at the top a little more pronounced (but it satisfies me for the time being).

As has been said on SCF many times before, there are no rules to stamp collecting (or precancel collecting); simply collect them the way you want...and enjoy. You have no one to answer to but yourself!